GDP figures confirm “We are still lagging behind every other major economy”

London, 22 Dec 2009

Data published today confirmed that economic output fell 0.2 per cent in the third quarter of this year. This was a smaller-than-expected upward revision of an earlier forecast of a 0.3 per cent decline.

The data did little to alter the negative sentiment towards the pound at the moment, due to the general weakness of the UK economy and market anxiety over the UK’s ballooning deficit. This was also exacerbated by the CBI’s prediction this week that the economy will not return to pre-recession growth levels for at least two years.

Mark Bolsom, Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist, said: “Although the GDP figures released this morning are slightly disappointing, it is unlikely they will affect investors either positively or negatively. It is a step in the right direction but also shows that the UK is still in recession and lagging behind the economic recovery of every other major economy.

“The data brings us no closer to confirming whether the UK economy has turned a corner and is on a path to sustained recovery.”

Sterling barely reacted to the news, dropping from €1.1230 to €1.1210 and against the US Dollar from $1.6080 to $1.6017.

Over the past week, Sterling has been volatile due to consistently mixed data. Bolsom says, “The pound was initially rewarded last week, seeing support on the back of positive inflation, house price and claimant count data. However, the week ended with disappointing retail sales numbers as well as PSNCR [Public Sector Net Cash Requirement] figures, which again highlighted the poor fiscal health of the UK economy.”

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Jessica Buttress
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Jessica.buttress@travelex.com

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About Travelex

Founded in 1976, Travelex is the world’s largest non-bank foreign exchange and payments specialist; with operations across four continents and 6,000 employees worldwide.

Travelex holds key positions in its three main areas of activity: Global Business Payments (TGBP, which includes Travelex Personal Payments), Currency Services and Card and Mobile Payments. Every year, more than 35,000 corporate clients and 30 million customers trust Travelex to manage their foreign exchange requirements.

Recently recognised by TowerGroup research as Industry Leader for payments innovation for SMEs, Travelex currently handles international payments for over 750 large corporate and financial institutions.

Visit www.travelexbusiness.com/uk for more information or email the press office at Jessica.Buttress@travelex.com